LG Electronics, a Korean tech giant, was once a leader in mobile phones, but is now closing that business. This acquisition demonstrates LG Electronics' ambitions in a new area, next-generation automotive hardware, and services. The company announced today that it would acquire Cybellum, an Israeli cybersecurity specialist who detects and assesses security vulnerabilities in connected vehicle services.
LG stated that the deal will be broken up into several pieces.
It will initially take a 64% share in Cybellum, which will cost $140 million. After the trading process is complete, it will add $20 million via a simple agreement to future equity (SAFE), note. This will also confirm the final valuation and investment.
If the current valuation is consistent, the total deal will be worth approximately $240 million. Market forces and the company's business funnel could have an impact on this.
LG has built a reputation as an investor in innovative automotive startups. However, this acquisition of Israel Cybellum is Tel Aviv's first and shows that the larger company is interested in more than just hardware. It is also interested in software solutions for the automotive industry.
It is well-known that software plays a critical role in the automotive industry. Effective cybersecurity solutions are therefore essential, stated Dr. Kim Jinyong, president and CEO of the LG Electronics Vehicle component Solutions Company. This deal will strengthen LG's cybersecurity foundation, making it more ready for connected cars.
This is a great return for Cybellum's investors, which also included Blumberg Capital and Target Global, as well as RSBG Ventures, the venture arm of German industrial giant RAG. Before this, Cybellum had raised just more than $14 million.
Slava Bronfman (a cybersecurity alumnus from the Israeli Defense Forces) and Michael Engstler (a startup founder) founded the startup in 2016. Over the years, the company has acquired a lot of large-name customers who use its technology including Jaguar Land Rover, Nissan and Toyota Tsusho.
Bronfman stated in an email interview that the plan is to work with all these companies while still operating as an independent entity.
The acquisition by LG of Cybellums technology and the resulting significant trends in connected cars and cybersecurity highlight some important trends.
The new attack vector for hackers is connected vehicles. It's a complex one considering the many components in vehicles and the various OEMs and auto companies that work within the larger vehicle ecosystem. As vehicles become smarter, more connected and ultimately more autonomous, this will make it more complicated. There will be more connected systems and more reliance on them to function safely.
A coordinated approach to cybersecurity across all channels has been a major challenge. LG is an established player in the market and plans to expand its position. LG also intends to invest in its future business and address an industry-wide need for services.
Cybellum's approach is to create the so-called digital twin of its system. This approach has been used in enterprise IT and healthcare. It monitors this to capture the whole picture and help identify and assess potential threats. This allows you to monitor the events in real-time without straining the vehicle's systems.
Bronfman stated that this is first and foremost an investment in security. Cybellum is cybersecurity company. LG, one of the most important automotive suppliers, prioritizes cybersecurity because they know that it is an integral part of the new era of connected cars and the transition to autonomous vehicles.
Although LG is not currently Cybellums' partner, Bronfman stated that they are planning to integrate the two in 2022.